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The overseas drops took on some signs of panic. The SP500 index grouping the largest companies in the US fell by 3.09% on Wednesday, wiping out profits from the entire year, and the technological Nasdaq dropped by as much as 4.4%. The winner was the American dollar and American bonds also strengthened. Both assets are perceived by investors as a safe haven.
Where does this sale come from? Three hot spots appeared: the US housing market is getting worse and the results of companies are getting worse (the US result season is currently underway) which report possible problems with future profits due to trade wars and global GDP growth. Investors might have been disturbed by bombs sent to CNN, the Obama and Clinton house.
Will it turn into a long bear market? There is no obvious answer to this, although analysts point out that the bull market in the United States is holding the last of its strength, and instead of rewarding better company results, investors sell them out for fear of worsening results in the future: "It is a sign that the bull market is ending" - they argue.
A lot is also said in the Fed's policy, which consistently raises interest rates, which are often the enemy of stock market investors. On Wednesday, President Donald Trump said in an interview that "the Federal Reserve is the biggest threat to the American economy." This is another billionaire critique for Jerome Powell, the Fed's chief.
Let's now take a look at the SP500 technical picture at the H4 time frame. After a failure to rally above the level of 274.40, the market reversed and all the supports were broken on its way to the level of 264.12, so now the levels of 267.69, 268.38 and 270.32 will act as a resistance for the price. The nearest technical support is seen at the level of 264.12, but if this one is violated as well, then the next one is seen at the level of 260.48. On the other hand, there is a clear bullish divergence between the price and the momentum oscillator, so a short-term pullback is welcome.
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